The Automatic Millionaire Review

Recently I had read a book called the "Automatic Millionaire" by David Bach. The book was really great, and I highly recommend picking up a copy. It's not a get rich quick book, but describes easy solutions to preparing yourself to retire rich. He uses what he calls his "Latte Factor" where if you spend one day adding up all the stuff you purchase you will quickly see where you are spending your money. As an example he uses a woman who everyday before work stops and buys a Starbucks coffee and a low fat bran muffin. He goes on to show her what the cost per day, week, month and year adds up to be. He is not saying that you can not spend your money on enjoyments such as this, but rather than buying a cup every morning instead buy a bag of your favorite coffee and brew it at home and take it with you on your drive to work. You can then take that money you saved and bank it, or invest it.

David Bach makes it so simple to be able to retire rich. It was so easy to get going after I had read the book. It also made me think, why the heck wasn't I taught this growing up and why was there never any information like this in school? I was also under the impression that being able to invest in stocks meant that I already had to have thousands of dollars to start with. Life would have been simpler after college if I had started out doing this as soon as possible. I can only imagine what I would have built up if I had started when I was teenager working a part time job. It's never too late to start though, and I have already built up a great deal of net worth in the short amount of time I have been doing this. You will be surprised at how quickly things will add up.

A really good idea would be to set up an account with Sharebuilder.com. Sharebuilder is an online brokerage designed to make investing easy, affordable and accessible for both beginning and experienced investors. With the Sharebuilder Plan, you can invest regularly through automatic investments, allowing you to buy partial shares of stocks and accumulate your investments over time.

You can schedule automatic investments either weekly or on a monthly basis. Setting yourself up to automate your investments is your key to success. The reason I say this is because you won't have to remind yourself to invest in your plan. Chances are if you do not set yourself up to automate your financial plan, you will come to a point where you will say "Well. I will do this next week when I have time." Eventually you will stop and give up your initial plan of investing.

My advice would be to sign up for the Sharebuilder Basic program with no subscriptions fees and only $4 per automatic investment. I would start by choosing one or two good companies to invest in. I will provide some resources below to help you. Think of some companies and products that you use in your daily life and write them down. You should have a starting list of 10-15. Use the resources below to look up information on your choices. Out of your selections find out which ones pay a dividend. You will want your one to two stocks to pay a dividend. This means that for every share you own, you are paid a portion of the company's earnings. Within your Sharebuilder account you can select to automatically reinvest those dividends or have the money go to your cash balance. I would opt to reinvest them.

After awhile your stock purchases will add up. Now investing does have some risk, but equally it has some rewards. Make sure you do some research on your stock picks. Stay away from penny stocks. Later on when you have more experience and you want to try buying and selling penny stocks, you can. For now though, you want to start building up a good, sound, diversified portfolio. Sharebuilder also has lots of tools within your account that can help you. To be diversified, you will need more than your one or two stocks. For now you will want to just start working towards building that portfolio by choosing the one or two investments. Later you can add more.

If you find that investing in stocks is not for you, Sharebuilder has an option of buying ETFs (exchange traded funds), which are like stocks allowing you to buy and sell, but typically safer like Mutual Funds.

Mutual Funds however grow much slower but I still recommend adding a few of these at a later time as well. You will need to find a different investment firm that handles Mutual Funds. A good resource for this would be Vanguard or Fidelity.

Please note: this is just my advice. I am not a broker or financial consultant. I am only offering up a suggestion and starting points for you to further research into on your own. I am not associated with any of the sites in any way, nor am I paid by any of them to suggest using their products or services. These are companies that I use in my own life and can honestly recommend them as a good resource.

Broker Accounts
http://www.sharebuilder.com
http://www.fidelity.com
http://www.vanguard.com
http://www.scottrade.com (no automated investing)

Research Resources
http://finance.yahoo.com
http://www.smartmoney.com
http://www.thestreet.com
http://moneycentral.msn.com/investor/home.asp
http://www.morningstar.com